TaxTMI 
TaxTMI 
2024 (1) TMI 852
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.... operating solar installations including batteries on telecom towers owned and operated by telecom companies. The basic object of the assessee is to provide uninterrupted power supply to telecom towers. The assessee had entered into an agreement, know as Master Service Agreement with M/s. Team Sustain Ltd., an Indian entity, managed by Mr. George Mathew and Mareena George. In terms of which, M/s. Team Sustain Ltd. was to execute solar installation projects, monitor the performance of solar power generators through a network operating centre by using variation software and maintain the solar assets on sites. Thus, in sum and substance, the assessee had outsourced its work of solar installation and batteries on telecom generators and maintenance to M/s. Team Sustain Ltd. Further, the assessee has entered into a framework agreement, in terms of which, the assessee advanced a sum of Rs. 8,13,03,459/- carrying interest rate of 14.05%, which was disbursed to M/s. Team Sustain Ltd. during the financial years 2015-16 and 2016-17. The interest income earned by the assessee on such advance was offered to tax in assessment years 2016-17 and 2017-18. 4. Subsequently, due to severe financial....
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....e deciding the appeal, learned Commissioner (Appeals) held that the deduction claimed being not in the nature of business expenditure, cannot be allowed. 6. Drawing our attention to the framework agreement and settlement agreement, learned counsel for the assessee submitted that the loan advanced to M/s. Team Sustain Ltd is for payment of service tax and other liabilities sustained by M/s. Team Sustain Ltd and not for acquiring any capital asset. Thus, it was submitted that since the loan was advanced for repayment of liabilities arising out of business operations, they are allowable as business expenditure. 7. Per contra, learned Departmental Representative, through written submission, has submitted as under : MAY IT PLEASE YOUR HONOURS Sub: Written Submission in the above case- reg. "The above case has come up for hearing today i.e., on 03/01/2024. The following submissions are made for favour of consideration of the Hon'ble Members 1. During the year, the appellant company was engaged in the business of operation and maintenance of telecom towers, to install, own and operate solar installation including batteries on telecom (owned and operated by te....
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....s that till financial year 2015-16 , the appellant was in the sole business of owning, installing and operating solar energy generating assets including batteries at telecom tower sites to provide solar energy and in turn, facilitating economic and uninterrupted power supply to the telecom companies. TSL was the prime service provider of the appellant company involved in project management, remote monitoring of sites through a Network Operating Centre(NOC) and Operations and Maintenance of solarized sites. It has been further submitted by the assessee that more than 75% of operational expenses were incurred through TSL and its associates It is therefore vivid that revenue of the assessee were majorly reliant upon the TSL for its knowhow, domain knowledge, expertise and resources (both tangible and intangible). 6. That assessee entered a Framework Agreement dated 21/01/2016 (Refer page 229 to 276 of PB of the assessee). As per this , the appellant advanced a sum of Rs. 8,13,03,459/- during F.Y 2015-16 and 2016-17 to TSL and subsequently under Settlement Agreement dated 14/02/2017 (Refer page 278 to 305 of the assessee PB) waived off the outstanding loan of Rs. 7,24,73,639/-....
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....very rightly held it as Capital Expenditure. As the appellant has challenged order and findings of Id CIT appeal before Hon'ble ITAT and the main question whether this expenditure is revenue or capital is now before the Hon'ble Bench and this being also a question to be examined on facts, it is submitted that the following agreements and documents have a direct bearing on such determination and therefore , in all my humility, need to be examined. As of now, the appellant has relied on agreements that were arising out of these Master agreements but has not produced these agreements /documents. These are as under:- i) Master Service Agreement dated 07th May 2013 between TSL and QPSI ( QUANTA POWER SOLUTIONS (INDIA) PRIVATE LIMITED) , as amended by a supplemental agreement dated 13th August 2014 executed between TSL, QPSI and QUANTA TOWERGEN PRIVATE LIMITED ( being the earlier name of the assessee). ii) Teaming Agreement dated 24th April 2012 (earlier to the agreement at 2 above) between TSL,George Mathew, QPSI and Quanta TowrGen as amended from time to time. Refer Page 234 of the assessee PB. iii) Transaction Documents. In Page 235 of PB of the assessee, a ....